What changed in this filing

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Item 1. Business

2026-02-12 compared with 2025-02-06 · 40 added, 71 removed, 171 unchanged (39% of the section changed)

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In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-K.

Merger Transaction and Spin-Off

On August 10, 2022, Safehold Inc.

(“Old SAFE”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with iStar Inc.

(“iStar”), and on March 31, 2023, in accordance with the terms of the Merger Agreement, Old SAFE merged with and into iStar, at which time Old SAFE ceased to exist, and iStar continued as the surviving corporation and changed its name to “Safehold Inc.” (the “Merger”).

For accounting purposes, the Merger is treated as a “reverse acquisition” in which iStar is considered the legal acquirer and Old SAFE is considered the accounting acquirer.

As a result, the historical financial statements of Old SAFE became the historical financial statements of Safehold Inc.

Unless the context otherwise requires, references to “iStar” refer to iStar prior to the Merger, and references to “we,” “our” and “the Company” refer to the business and operations of Old SAFE and its consolidated subsidiaries prior to the Merger and to Safehold Inc.

(formerly known as iStar Inc.) and its consolidated subsidiaries following the consummation of the Merger.

Periods presented prior to the Merger date of March 31, 2023 reflect the operations of Old SAFE and periods presented subsequent to March 31, 2023 represent the financial statements of the Company.

Additionally, in connection with the Merger, Safehold Operating Partnership LP converted from a Delaware limited partnership into a Delaware limited liability company and changed its name to “Safehold GL Holdings LLC” (“Portfolio Holdings”), with the Company as its managing member.

The Company conducts all of its business and owns all of its properties through Portfolio Holdings.

In addition, holders of Caret units in Old SAFE’s subsidiary, Caret Ventures LLC (“Caret Ventures”), contributed their interests in Caret Ventures to Portfolio Holdings in return for Caret units issued by Portfolio Holdings.

Following the restructuring, 100% of the equity interests in Caret Ventures is held by Portfolio Holdings, and Portfolio Holdings is owned by the Company, management of the Company, employees and former employees of the Company, affiliates of MSD Partners, L.P.

(“MSD Partners”) and other outside investors.

Immediately before the closing of the Merger, iStar separated its remaining legacy non-ground lease assets and businesses, approximately $50.0 million of cash, exclusive of working capital reserves and restricted cash, and approximately 13.5 million shares of Old SAFE common stock into Star Holdings, a Maryland statutory trust (“Star Holdings”), by distributing to iStar’s stockholders, on a pro rata basis, the issued and outstanding equity interests of Star Holdings (the “Spin-Off”).

Following the Merger, the Company serves as external manager to Star Holdings.

Other Merger and Spin-Off related transactions

On August 10, 2022, iStar entered into an agreement (the “MSD Stock Purchase Agreement”) with MSD Partners pursuant to which MSD Partners agreed to purchase 5,405,406 shares of Old SAFE’s common stock then owned by iStar (the “MSD Stock Purchase”) for an aggregate purchase price of approximately $200 million, or $37.00 per share, payable in cash.

MSD Partners’ rights and obligations under the MSD Stock Purchase Agreement were subsequently assigned to certain of its affiliates.

The MSD Stock Purchase closed on March 31, 2023, shortly before the closing of the Merger.

MSD Partners has the right to designate an observer to the board of directors of the Company, a top-up right on future equity issuances (subject to certain exceptions) and registration rights.

MSD Partners is subject to a customary standstill and certain restrictions on sales of its shares of the Company’s common stock.

On August 10, 2022, MSD Partners also agreed to purchase 100,000 Caret units (refer to Note 12 to the consolidated financial statements) from the Company for an aggregate purchase price of $20.0 million (the “MSD Caret Purchase”).

MSD Partners received a credit against their purchase price for Caret units equal to the amount they would have received had they held Caret units at the time of a December 2022 distribution to other Caret unit holders, which was equal to $0.6 million.

MSD Partners’ rights and obligations under the purchase agreement were subsequently assigned to certain of its affiliates.

The closing of the MSD Caret Purchase took place in conjunction with the closing of the Merger on March 31, 2023.

Star Holdings was capitalized in part with an 8.0%, four-year term loan from the Company having an initial principal amount of $115.0 million, as well as SOFR plus 3.00% bank debt with an initial principal balance of $140.0 million from Morgan Stanley Bank, N.A.

which is secured by approximately 12.9 million shares of the Company as of December 31, 2024.

In connection with the Spin-Off, Safehold Management Services Inc.

(“SpinCo Manager”), a Delaware corporation and a subsidiary of the Company, entered into a management agreement with Star Holdings effective as of March 31, 2023, pursuant to which SpinCo Manager will continue to operate and pursue the orderly monetization of Star Holding’s assets.

Star Holdings paid SpinCo Manager an annual management fee of $25.0 million for the term ended March 31, 2024.

The annual fee declines to $15.0 million, $10.0 million and $5.0 million, respectively, in each of following annual terms, and adjusts to 2.0% of the gross book value of Star Holdings’ assets, excluding shares of the Company’s common stock held by Star Holdings, thereafter.

The Company and Star Holdings also entered into a governance agreement that places certain restrictions on the transfer and voting of the shares of the Company owned by Star Holdings, and a registration rights agreement under which the Company agreed to register such shares for resale in accordance with applicable securities laws.

We are a publicly-traded company that operates our business through one reportable segment by acquiring, managing and capitalizing ground leases.

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The property is generally leased on a triple net basis with the tenant generally responsible for taxes, maintenance and insurance as well as all operating costs and capital expenditures.

Ground Leases typically provide that at the end of the lease term or upon tenant default and the termination of the Ground Lease upon such default, the land,

building and all improvements revert to the landlord.

Ground Leases typically provide that at the end of the lease term or upon tenant default and the termination of the Ground Lease upon such default, the land, building and all improvements revert to the landlord.

We have become the industry leader in Ground Leases by demonstrating the value of the product to real estate investors, owners, operators and developers and expanding their use throughout major metropolitan areas.

We have a portfolio of properties diversified by property type and region.

Our portfolio is comprised of Ground Leases and one master lease (relating to five hotel assets that we refer to as our “Park Hotels Portfolio”) that provide for contractual periodic rent escalations and in some cases percentage rent participations in gross revenues generated at the relevant properties.

As of December 31, 2025, our portfolio is comprised of Ground Leases that provide for contractual periodic rent escalations and in some cases percentage rent participations in gross revenues generated at the relevant properties.

We have chosen to focus on Ground Leases because we believe they meet an important need in the real estate capital markets for our customers.

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The combined value of the land and buildings and improvements thereon subject to a Ground Lease (the "Combined Property Value") typically significantly exceeds the Ground Lease landlord’s investment in the Ground Lease;

therefore, even if the landlord takes over the property following a tenant default or upon expiration of the Ground Lease, the landlord is reasonably likely to recover substantially all of its Ground Lease investment, and possibly amounts in excess of its investment, depending upon prevailing market conditions.

therefore, even if the landlord takes over the property following a tenant default or upon expiration of the Ground Lease, the landlord may recover substantially all of its Ground Lease investment, and possibly amounts in excess of its investment, depending upon prevailing market conditions.

Additionally, the typical structure of a Ground Lease provides the landlord with a residual right to regain possession of its land and take ownership of the buildings and improvements thereon upon a tenant default.

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We calculate this estimated value by subtracting our original aggregate cost basis in the Ground Leases from our estimated aggregate Combined Property Value based on estimates by the valuation firm and by management.

The table below shows the current estimated UCA as of December 31, 2024 and 2023 ($ in millions):

The table below shows the current estimated UCA in our owned residual portfolio as of December 31, 2025 and 2024 ($ in millions):

December 31, 2025

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See "Risk Factors- Certain tenant rights under our Ground Leases may limit the value and the UCA we are able to realize upon lease expiration, sale of our land and Ground Leases or other events " for a discussion of certain tenant rights and other terms of the leases that may limit our ability to realize value from the UCA.

(2) Combined Property Value as of December 31, 2023 includes one investment in our Ground Lease Plus Fund (which we acquired from the Ground Lease Plus Fund in January 2024 - refer to Note 7 to the consolidated financial statements), and for both periods includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $319.8 million and $1,357.4 million related to transactions with remaining unfunded commitments as of December 31, 2024 and 2023, respectively.

Combined Property Value excludes the term loan to Star Holdings, the assets in the Leasehold Loan Fund (refer to Note 7 to the consolidated financial statements), the rest of the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests.

Ground Lease Cost as of December 31, 2023 includes one investment in our Ground Lease Plus Fund (which we acquired from the Ground Lease Plus Fund in January 2024), and for both periods includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $46.2 million and $135.6 million (including amounts paid to the Ground Lease Plus Fund in January 2024 to acquire the investment) of unfunded commitments as of December 31, 2024 and 2023, respectively.

Ground Lease Cost excludes the term loan to Star Holdings, the assets in the Leasehold Loan Fund, the rest of the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests.

(2) Combined Property Value as of December 31, 2025 and 2024 includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $616.2 million and $319.8 million related to transactions with remaining unfunded commitments as of December 31, 2025 and 2024, respectively.

Combined Property Value excludes the term loan to Star Holdings, the assets in the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements), the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests.

Ground Lease Cost as of December 31, 2025 and 2024 includes our applicable percentage interests in our unconsolidated Ground Lease ventures and $142.3 million and $46.2 million of unfunded commitments as of December 31, 2025 and 2024, respectively.

Ground Lease Cost excludes the term loan to Star Holdings, our leasehold loans, the assets in the Leasehold Loan Fund, the assets in the Ground Lease Plus Fund and amounts attributable to noncontrolling interests.

As of December 31, 2025, our gross book value as a percentage of combined property value was 52%.

In 2018, Old SAFE established the Caret program (as defined below).

In 2018, Old SAFE (refer to Merger Transaction below) established the Caret program (as defined below).

The Caret program is designed to recognize the two distinct components of value in our Ground Lease portfolio by separating them into:

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● the “Caret component,” which consists of the UCA above our investment basis in our Ground Leases due to our ownership of the land and improvements at the end of the term of the applicable Ground Lease.

We conduct all of our business and own all of our properties through Safehold GL Holdings LLC (“Portfolio Holdings”) and are its managing member.

Portfolio Holdings’ two classes of limited liability company interests are designed to track these two components:

“GL units” are intended to track the bond component and “Caret units” are designed to track the Caret component (the “Caret program”).

We currently hold all of the issued and outstanding GL units of Portfolio Holdings.

We currently hold all of the issued and outstanding GL units of Portfolio Holdings, and the issued and outstanding Caret units are held by us, our management, our employees and former employees, affiliates of MSD Partners, L.P.

(“MSD Partners”) and other outside investors.

In general, all of our Ground Leases are subject to the Caret program, except for non-commercial Ground Leases and pre-development Ground Leases.

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See “SAFE Proposal 2:

The SAFE Caret

Amendment Proposal” in our Registration Statement on Form S-4, filed with the SEC on December 16, 2022, for more information on the Caret program.

The SAFE Caret Amendment Proposal” in our Registration Statement on Form S-4, filed with the SEC on December 16, 2022, for more information on the Caret program.

During the third quarter of 2018, Old SAFE adopted, and in the second quarter of 2019, its stockholders approved, the Caret Performance Incentive Plan (the “Original Caret Performance Incentive Plan”).

Under the Original Caret Performance Incentive Plan, 1,500,000 Caret units were reserved for grants of performance-based awards to Original Caret Performance Incentive Plan participants, including certain executives of the Company, or its affiliates, directors of Old SAFE and service providers of Old SAFE.

Under the Original Caret Performance Incentive Plan, 1,500,000 Caret units were reserved for grants of performance-based awards to Original Caret

Performance Incentive Plan participants, including certain executives of the Company, or its affiliates, directors of Old SAFE and service providers of Old SAFE.

Initial grants under the Original Caret Performance Incentive Plan were subject to graduated vesting based on time-based service conditions and hurdles of our common stock price, all of which have been satisfied.

In connection with the Merger, certain of Old SAFE’s executive officers entered into re-vesting agreements pursuant to which the executives agreed to subject 25% of their previously vested Caret units to additional vesting conditions which will be satisfied on March 31, 2025 (the second anniversary of the Merger), subject to the applicable executive’s continued employment through such date.

In connection with the Merger, each Award Agreement (as defined in the Original Caret Performance Incentive Plan) related to outstanding Caret unit awards was assigned to Portfolio Holdings, and Old SAFE amended and restated the Original Caret Performance Incentive Plan (the “Caret Performance Incentive Plan”).

Following the Merger, 76,801 Caret units were awarded to executive officers and other employees under such plan that are subject to cliff vesting on the fourth anniversary of their grant date if our common stock has traded at an average price of $60.00 or more for at least 30 consecutive trading days during that four-year period.

In connection with the Merger (refer to Merger Transaction below), each Award Agreement (as defined in the Original Caret Performance Incentive Plan) related to outstanding Caret unit awards was assigned to Portfolio Holdings, and Old SAFE amended and restated the Original Caret Performance Incentive Plan (the “Caret Performance Incentive Plan”).

Following the Merger, 76,801 Caret units were awarded to executive officers and other employees under such plan that are subject to cliff vesting on March 31, 2027 if our common stock has traded at an average price of $60.00 or more for at least 30 consecutive trading days during that four-year period.

In December 2025, we granted 50,000 Caret units to an employee that will vest pro rata annually over a five-year period, subject to continued employment and service conditions.

As a result, as of December 31, 2025, vested and unvested Caret units beneficially owned by our officers and other employees represent approximately 14.9% of the outstanding Caret units and 11.9% of the authorized Caret units, including 6.1% held directly and indirectly by Jay Sugarman, our Chairman and Chief Executive Officer.

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In April 2024, all of the investors in the February 2022 transaction exercised this right and elected to have their Caret units redeemed at the original purchase price less the amount of distributions previously made on such units.

On March 31, 2023, Old SAFE sold 100,000 Caret units to affiliates of MSD Partners for an aggregate purchase price of $20.0 million (refer to Note 1 to the consolidated financial statements) pursuant to a subscription agreement entered into on August 10, 2022 and sold an aggregate of 22,500 Caret units to third-party investors for an aggregate $4.5 million pursuant to a subscription agreement entered into in November 2022.

In September 2022, Old SAFE sold a Ground Lease in the Washington, D.C.

market for $136.0 million to a third-party purchaser.

The transaction generated a net book gain for us of approximately $46.4 million.

After paying closing costs, establishing reserves for Caret-related expenses and deducting the original $76.7 million cost basis to us, the remaining proceeds were distributed approximately 84% to Old SAFE and approximately 16% to the minority holders of Caret units.

In addition, the affiliates of MSD Partners received a credit against their purchase price for Caret units equal to the amount they would have received had they held Caret units at the time of the distribution.

On March 31, 2023, Old SAFE sold 100,000 Caret units to affiliates of MSD Partners for an aggregate purchase price of $20.0 million pursuant to a subscription agreement entered into on August 10, 2022 and sold an aggregate of 22,500 Caret units to third-party investors for an aggregate $4.5 million pursuant to a subscription agreement entered into in November 2022.

Market Opportunity :

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However, while we intend to pursue acquisitions of existing Ground Leases, our investment thesis is predicated, in part, on what we believe is an untapped market opportunity to expand the use of Ground Leases to a broader component of the approximately $7.0 trillion institutional commercial property market in the U.S.

We intend to capture this market opportunity by utilizing multiple sourcing and origination channels, including manufacturing new Ground Leases with third-party owners and developers of commercial real estate and originating Ground Leases to provide capital for development and

redevelopment.

We further believe that Ground Leases generally represent an attractive source of capital for our tenants and may allow them to generate superior returns on their invested equity as compared to utilizing alternative sources of capital.

Prior to the Merger, we relied on the extensive investment origination and sourcing platform of iStar, the parent company of our former manager, to actively promote the benefits of the Ground Lease structure to prospective Ground Lease tenants.

Subsequent to the Merger and the acquisition of iStar and its employees, we are internally managed.

Additionally, we have created additional channels and products that allows us to build a larger, captive pipeline.

In connection with the Merger, Old SAFE acquired iStar’s interests in iStar’s two Ground Lease ecosystem funds, Ground Lease Plus Fund and Leasehold Loan Fund (refer to Note 7 to the consolidated financial statements).

The Ground Lease Plus Fund includes three assets and targets high quality projects in pre-construction development phase with institutional developers.

The Leasehold Loan Fund currently includes four assets and allows for customers to receive their full capital structure needs in one place.

Additionally, we have created additional channels and products that allow us to build a larger, captive pipeline.

We have interests in two Ground Lease ecosystem funds, the Ground Lease Plus Fund and the Leasehold Loan Fund (refer to Note 8 to the consolidated financial statements), and in 2025, we also began originating leasehold loans individually.

The Ground Lease Plus Fund includes two assets and targets high quality projects in pre-construction development phase with institutional developers.

The Leasehold Loan Fund currently includes three assets and allows customers to receive their full capital structure needs in one place.

Customers are able to receive a mortgage leasehold loan as well as a Ground Lease through us.

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Additionally, our product “SAFExSELL” provides clients with an opportunity to enter into a Ground Lease at the time of the sale of a real estate asset, generating greater proceeds than would normally be expected in connection with a fee simple sale.

Merger Transaction:

On August 10, 2022, Safehold Inc.

(“Old SAFE”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with iStar Inc.

Following the Merger, the Company, through its subsidiary, Safehold Management Services Inc.

(“SpinCo Manager”), a Delaware corporation, serves as external manager to Star Holdings.

SpinCo Manager is party to a management agreement with Star Holdings pursuant to which SpinCo Manager operates and pursues the orderly monetization of Star Holding’s assets.

Star Holdings was capitalized in part with an 8.0% term loan from the Company having an initial principal amount of $115.0 million (refer to Note 7 to the consolidated financial statements).

We are a Maryland corporation and our common stock is listed on the New York Stock Exchange under the symbol "SAFE." The Company, then known as iStar, elected to be taxed as a real estate investment trust ("REIT") for U.S.

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● Ground Rent Coverage, defined as the ratio of the Property’s NOI to the annualized rental payment due us, of approximately 2.0x to 4.5x.

Property NOI is defined as the trailing twelve month net operating income of

the building and improvements being operated at the property without giving effect to any rent paid or payable under our Ground Lease, and for this purpose we use estimates of the stabilized Property NOI if we don’t receive current tenant information and for properties under construction or in transition, in each case based on leasing activity at the property and available market information, including leasing activity at comparable properties in the relevant market;

Property NOI is defined as the trailing twelve month net operating income of the building and improvements being operated at the property without giving effect to any rent paid or payable under our Ground Lease, and for this purpose we use estimates of the stabilized Property NOI if we don’t receive current tenant information and for properties under construction or in transition, in each case based on leasing activity at the property and available market information, including leasing activity at comparable properties in the relevant market;

● Value of approximately 30% to 45% of the Combined Property Value at the commencement of the lease or the acquisition date;

● First year cash return on asset of between 2.5% and 5.5% and effective yields between 4.5% and 7.5%.

● First year cash return on assets of between 2.5% and 5.5% and effective yields between 4.5% and 7.5%.

Financing Strategy

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We compete with numerous commercial developers, real estate companies (including other REITs), financial institutions (such as banks and insurance companies) and other investors (such as pension funds, investment funds, private companies and individuals) for investment opportunities and tenants.

This competition may result in higher costs for

properties, lower returns and impact our ability to grow.

This competition may result in higher costs for properties, lower returns and impact our ability to grow.

Some of these competitors have greater financial and other resources and access to more attractive capital than we do.

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Substantially all of our employees are full-time employees and they are not represented by any collective bargaining agreements.

As we have transitioned the focus of our business to growing our Ground Lease platform, we have sought to recruit new talent and provide training to existing employees to support our business strategy.

As we focus on our business of growing our Ground Lease platform, we seek to recruit new talent and provide training to existing employees to support our business strategy.

In our recruiting efforts, we generally strive to draw from the largest feasible pool of candidates to consider for roles.

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We maintain a number of health and wellness programs to support the welfare of our people.

These programs include an employee assistance program that offers confidential assessment, counseling and referral services at no cost to the employee.

These programs include an employee assistance program that offers confidential assessment, counseling and referral services at no cost to

the employee.

We seek to provide a safe workplace for our employees and have established emergency procedures that address emergency health and safety situations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business